Golden payoffs of Town Hall chiefs

A THIRD of town hall bosses walk away from their jobs with a golden goodbye worth hundreds of thousands of pounds, according to a survey by the local government spending watchdog.

The Audit Commission found some council chief executives had received severance payments of more than 500,000 and since 2007, 37 have been paid 9.5m in total.

It called for much greater transparency about the deals, saying many were unjustified.

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In 2007 Susan Law, the former managing director at Doncaster Council, walked away with a 120,000 pay-off following a breakdown in relations with the then mayor, Martin Winter.

And former Wakefield Council chief executive John Foster, who now earns 200,000 a year at Islington Council in north London, is understood to have received 540,000 in his final year at the West Yorkshire authority including a substantial pay-off.

The commission has made a number of recommendations which were backed by Communities and Local Government Secretary John Denham, who has written to Margaret Eaton, chair of the Local Government Association, urging their rapid adoption.

He said: "The Audit Commission report shows that too many chief executives are being dismissed because they have fallen out with council leaders – this can cost as much as 500,000 in some cases and is all too often seen as a quick-fix solution.

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"It is time we find a way to change the rules so taxpayers' money can be clawed back where the system has been exploited.

"Councils should also make publicly available what they waste in pay-offs and set up remuneration committees to decide appropriate pay awards and senior structures.

"Local government, like the rest of the public sector, needs to show that it can take the tough choices to make sure public money is used in a way that protects the frontline services which matter to people most."

The Audit Commission has demanded that paid-off chief executives who quickly find a job elsewhere be required to hand back at least some of the cash, that consideration be given to advance "pre-nuptial" agreements setting out the specific grounds and terms for severance of contract, and all severance deals be reviewed by council scrutiny or remuneration committees, with details published shortly after they are agreed.

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The commission also called for formal appraisal processes for chief executives to prevent pay-offs for poor leaders.

The study found that, of 122 departing chief executives between January 2007 and September 2009, 37 had been paid off under mutually-agreed contract terminations.

The average payment was 256,104, but 13 were worth more than 300,000 and three were of more than 500,000.

The watchdog said the trigger for pay-offs was usually the breakdown in relations between the chief executive and the elected members but some resulted from little more than a personality clash or incoming political leaders wanting to be rid of a senior officer associated with their predecessors.

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Audit Commission chairman Michael O'Higgins said there had been a lot of assertions on this subject. "Now the Audit Commission is laying out the facts and making recommendations aimed at protecting the public purse, as well as the rights of chief executives and council leaders."